EXHIBIT 10.2
SECOND AMENDMENT TO CREDIT
AGREEMENT
SECOND AMENDMENT (this “ Amendment ”), dated
as of October 15, 2009, to the Credit Agreement, dated as of
February 28, 2008, as amended by that certain First Amendment to
Credit Agreement dated as of May 29, 2009 (as amended, restated,
amended and restated, supplemented or otherwise modified from time
to time, the “ Credit Agreement ”),
among SOLUTIA INC., a Delaware corporation (the “
U.S. Borrower ”); SOLUTIA EUROPE SPRL/BVBA, a private
limited liability company incorporated under Belgian law with
registered office Chaussée de Boondael 6, 1050 Bruxelles,
registered with the Crossroads Bank for Enterprises under number
0460.474.440, Commercial Court of Brussels (formerly known as
Solutia Europe SA/NV, a limited liability company) (“
Solutia Europe ”); FLEXSYS SA/NV, a limited liability
company incorporated under Belgian law
(“société anonyme” / “naamloze
vennootschap”), having its registered office at
Boondaalsesteenweg 6, 1050 Brussels, Belgium and registered with
the Crossroads Bank for Enterprises under number 454.045.419,
Commercial Court of Brussels (“ Flexsys ” and
together with Solutia Europe, the “ European Borrowers
”, and each, a “ European Borrower ”; the
European Borrowers, together with the U.S. Borrower, are the
“ Borrowers ” and each, a “
Borrower ”); each of the Lenders; CITIBANK, N.A., as
administrative agent for the Lenders (together with its successors
in such capacity, the “ Administrative Agent ”),
and as collateral agent for the Secured Parties (together with its
successors in such capacity, the “ Collateral Agent
”) and as Issuer (the “Issuer”); CITIBANK
INTERNATIONAL PLC, as collateral agent for the European Secured
Parties, and the other parties party
thereto. Capitalized terms used herein without
definition shall have the meanings ascribed to them in the Credit
Agreement.
RECITALS
A. Borrowers,
the Administrative Agent, the Lenders and other parties thereto are
party to the Credit Agreement.
B. Borrowers
have requested that certain amendments be made to the Credit
Agreement as set forth herein.
C. The
Lenders signatory to an acknowledgement and consent in the form
attached hereto as Annex A (a “ Lender Consent Letter
”) and the Administrative Agent have consented to this
Amendment on the terms and subject to the conditions set forth
herein.
AGREEMENT
NOW, THEREFORE, in consideration of the
foregoing and the mutual covenants herein contained, and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as
follows:
1. Amendments to
Credit Agreement . As of the Second Amendment
Effective Date (as defined below) and subject to the satisfaction
of the conditions set forth in Section 2 hereof, the Credit
Agreement shall be amended as set forth below:
(a) Amendments to
Section 1.01 – Defined Terms . Section 1.01 of
the Credit Agreement is hereby amended by adding the following
definitions to Section 1.01, which shall be inserted in the proper
alphabetical order.
“ FAS 5 ” means the Statement
of Financial Accounting Standards No. 5 of The Financial Accounting
Standards Board.
“ Permitted Loan Purchase ”
has the meaning assigned to such term in the Term Loan Credit
Agreement as in effect on the date hereof (after giving effect to
the first amendment thereto).
“ Permitted Other Debt ”
shall mean senior secured or unsecured notes or loans (which in
either case, if secured, are secured by a Lien ranking junior to
the Lien securing the Term Loan Obligations with respect to such
Collateral), in either case issued by a U.S. Loan Party, (a) the
terms of which do not provide for any scheduled repayment,
mandatory redemption, mandatory prepayment or sinking fund
obligations prior to, at the time of incurrence, the Scheduled
Termination Date (other than customary offers to repurchase or
mandatory prepayment provisions, as applicable, upon a change of
control, asset sale, debt issuance, sale of the company, excess
cash flow or casualty or condemnation event and customary
acceleration rights after an event of default and scheduled
amortization payments not in excess of 1% of the original principal
amount of any such notes or loans constituting Permitted Other Debt
during any Fiscal Year), (b) the covenants, events of default and
other terms of which (other than interest, fees, discount and other
pricing and economic provisions and redemption or prepayment
provisions and call protection and prepayment premiums), taken as a
whole, are not more restrictive to the U.S. Borrower and its
Restricted Subsidiaries than the Term Loan Documents, (c) no
Subsidiary of the U.S. Borrower (other than a Subsidiary Guarantor
that is a Domestic Subsidiary of the U.S. Borrower) is an obligor
with respect thereto, (d) if secured, are not secured by any assets
other than the Collateral and (e) the U.S. Borrower shall deliver a
certificate of an Authorized Officer of the U.S. Borrower to the
Administrative Agent at least five Business Days (or such shorter
period as the Administrative Agent may reasonably agree) prior to
the incurrence of such Indebtedness, together with a reasonably
detailed description of the material terms and conditions of such
Indebtedness or drafts of the documentation relating thereto,
stating that the U.S. Borrower has determined in good faith that
such terms and conditions satisfy the foregoing
requirements.
“ Permitted Other Debt Documents
” shall mean any document or instrument (including any
guarantee, security agreement or mortgage) issued or executed and
delivered with respect to any Permitted Other Debt by any Loan
Party.
“ Permitted Other Debt Obligations
” shall mean, if any Permitted Other Debt is issued, all
advances to, and debts, liabilities, obligations, covenants and
duties of, any Loan Party arising under any Permitted Other Debt
Document, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now
existing or hereafter arising and however acquired and whether or
not evidenced by any note, guaranty or other instrument or for the
payment of money, including all fees and interest (including
interest accruing after the maturity of such Permitted Other Debt
and interest accruing (or that would accrue but for the
commencement of any bankruptcy, insolvency, reorganization or like
proceeding) after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding,
whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding). Without limiting the generality of the
foregoing, the Permitted Other Debt Obligations of the applicable
Loan Parties under the Permitted Other Debt Documents include the
obligation (including guarantee obligations) to pay principal,
interest, fees, premiums, charges, expenses, attorneys’ fees
and disbursements and other sums chargeable to any such Loan Party
under any Permitted Other Debt Document.
“ Qualified Unrestricted Subsidiary
” means any Unrestricted Subsidiary designated as a
“Qualified Unrestricted Subsidiary” pursuant to a
certificate of an Authorized Officer of the U.S. Borrower delivered
to the Administrative Agent and otherwise in compliance with
Section 5.18; provided that there shall be no more than one
Qualified Unrestricted Subsidiary.
“ Second Amendment ” means
that certain Second Amendment to Credit Agreement dated as of
October 15, 2009.
“ Second Amendment Effective Date
” means October 15, 2009.
“ Senior Notes ” means the
senior notes to be issued by the U.S. Borrower on or around the
Second Amendment Effective Date, which such notes shall comply with
the definition of Permitted Other Debt (other than clause (b) of
that definition, unless such notes are secured).
“ Senior Notes Documents ”
means (i) an indenture, dated on or around the Second Amendment
Effective Date, among the U.S. Borrower, certain Domestic
Subsidiaries of the U.S. Borrower and the trustee named therein,
and (ii) each other document and instrument executed in respect
thereto, which provisions of such indenture, documents and
instruments shall comply with the definition of Permitted Other
Debt (other than clause (b) of that definition, unless the notes
issued thereunder are secured).
“ Senior Notes Secured Parties
” shall mean (i) the holders from time to time of secured
Senior Notes, (ii) the holders from time to time of any secured
Indebtedness permitted pursuant to Section 6.01(xxiv)(y) and (iii)
any representative on behalf of any such holders.
“ Specified Businesses
” means the businesses described on Schedule
1.01(n).
“ Term Loan Obligations ”
means the “Obligations” under and as defined in the
Term Loan Credit Agreement.
“ Transferred Liability ”
means, in connection with any sale, transfer or other disposition
of assets by the U.S. Borrower or its Restricted Subsidiaries, any
liability (i) that would be recorded on a balance sheet of the U.S.
Borrower or its Restricted Subsidiaries in accordance with GAAP or
identified under FAS 5, (ii) that is related to the assets sold,
transferred or otherwise disposed of by the U.S. Borrower or its
Restricted Subsidiaries, (iii) that is (x) expressly assumed by the
purchaser or transferee of such assets or (y) expunged by the
holder of such liability, and (iv) with respect to which the U.S.
Borrower and its Restricted Subsidiaries are fully and
unconditionally released upon consummation of such sale, transfer
or other disposition.
(b) The definition of
“ Consolidated EBITDA ” in Section 1.01 of the
Credit Agreement is hereby amended by:
(i) inserting the
phrase “, but including any gains or income associated with
cancellation or extinguishment of Term Loans (including any gains,
income or loss from Permitted Loan Purchases)” immediately
following the phrase “(y) the amount attributable to minority
interests” set forth in the parenthetical located in clause
(i) following the reference to “ minus ”
contained therein; and
(ii) inserting the
following at the end of such definition:
“For the avoidance of doubt, Consolidated
EBITDA shall not be increased or decreased as a result of any gains
or income or losses associated with cancellation or extinguishment
of Term Loans (including any gains, income or loss from Permitted
Loan Purchases).”
(c) The definition of
“ Consolidated Interest Expense ” in Section
1.01 of the Credit Agreement is hereby amended by adding the words
“, issuance of Equity Interests or Equity Rights” after
the words “Permitted Acquisitions” in the last
paragraph thereof.
(d) The definition of
“ Eligible European Inventory ” in Section 1.01
of the Credit Agreement is hereby amended by replacing the words
“Permitted Restructuring” with the words “a
transaction between Solutia Europe and Flexsys of the type
described in Section 6.03(v)” where such words appear
therein.
(e) The
definition of “ European Borrowing Base ” in
Section 1.01 of the Credit Agreement is hereby amended by replacing
the words “Permitted Restructuring” with the words
“a transaction between Solutia Europe and Flexsys of the type
described in Section 6.03(v)” in each place that such words
appear therein.
(f) The definition of
“ Letter of Credit Sublimit ” in Section 1.01 of
the Credit Agreement is hereby amended by replacing the words
“$175.0 million” with the words “$125.0
million”.
(g) The definition of
“ Permitted Acquisition ” in Section 1.01 of the
Credit Agreement is hereby amended by amending clause (f) by adding
the following words at the beginning thereof:
“in the case of any acquisition or series
of related acquisitions where the Acquisition Consideration is
greater than $10.0 million in the aggregate,”
(h) The definition of
“ Permitted Guarantor Factoring Transactions ”
in Section 1.01 of the Credit Agreement is hereby amended by
replacing the words “$15.0 million” with the words
“$30.0 million”.
(i) The definition of
“ Pro Forma Basis ” in Section 1.01 of the
Credit Agreement is hereby amended by:
(i) adding
the following words immediately after the words “Asset
Sale” the first time they appear in clause
(ii): “or designation of a Subsidiary as an
Unrestricted Subsidiary (or of an Unrestricted Subsidiary as a
Restricted Subsidiary) pursuant to Section 5.18”;
(ii) adding
the following parenthetical immediately after the word
“Investment” where the term Investment appears in
clause (ii)(a)(i): “(including an Investment resulting from
an Unrestricted Subsidiary being designated as a Restricted
Subsidiary pursuant to Section 5.18)”; and
(iii) adding
the following words immediately after the words “Restricted
Subsidiaries” in clause (ii)(a)(ii): “, or in the case
of the designation of a Subsidiary as an Unrestricted Subsidiary
pursuant to Section 5.18.”
(j) Amendment to
Section 2.05 – Reduction and Termination of Revolving Credit
Commitment . Section 2.05 of the Credit Agreement is
hereby amended by deleting the second proviso at the end thereof
and substituting the following new provisos therefore:
“
provided further that in connection with any such
reduction, the U.S. Borrower may specify (i) a reduction of the
European Sublimit by an amount determined by it, and (ii) a
reduction in the unused portions of the Eurocurrency Sublimits of
the Eurocurrency
Lenders in an
amount equal to the percentage by which the European Sublimit is
reduced, such reductions to be effective contemporaneously with the
reduction of the Revolving Credit Commitment; and provided
finally , that in no event shall the European Sublimit
exceed an amount equal to 50% of the aggregate Revolving Credit
Commitments.”
(k) Amendment to
Section 6.01 – Indebtedness .
(i) Clause (xii) of
Section 6.01 of the Credit Agreement is hereby amended in its
entirety as follows:
“(xii) Indebtedness
of any Non-U.S. Restricted Subsidiary that is a Non-Guarantor
Restricted Subsidiary, and Guarantees by any Non-U.S. Restricted
Subsidiary that is a Non-Guarantor Restricted Subsidiary in respect
of such Indebtedness; provided that (A) no Default shall have
occurred and be continuing or would immediately result therefrom
and (B) the aggregate principal amount of all such Indebtedness
shall not exceed an aggregate of $75.0 million at any one time
outstanding;”
(ii) Clause (xiv) of
Section 6.01 of the Credit Agreement is hereby amended in its
entirety with the following:
“(xiv) Indebtedness
of the Loan Parties (other than the Senior Notes), that is either
(x) Indebtedness in an aggregate principal amount not to exceed
$300.0 million at any one time outstanding secured by a Lien
ranking junior to the Liens securing the Obligations and the Term
Loan Obligations or (y) unsecured Indebtedness; provided
that in each case (A) such Indebtedness will not mature prior to
the date that is one year following the Scheduled Termination Date,
(B) the terms of such Indebtedness do not provide for any scheduled
repayment, mandatory redemption, mandatory prepayment or sinking
fund obligations prior to the date that is one year following the
Scheduled Termination Date (other than customary offers to
repurchase or mandatory prepayment provisions, as applicable, upon
a change of control, asset sale, debt issuance, sale of the
company, excess cash flow or casualty or condemnation event and
customary acceleration rights after an event of default and
scheduled amortization payments not in excess of 1% of the original
principal amount of any such Indebtedness during any Fiscal Year),
(C) after giving effect to the incurrence of such Indebtedness on a
Pro Forma Basis, the Net Interest Expense Coverage Ratio shall be
not less than 2.0:1.0 as of the most recent Test Period (assuming
that such incurrence of Indebtedness, and each other incurrence of
Indebtedness under this Section 6.01 consummated since the first
day of such Test Period, and the application of the proceeds
thereof, had occurred on the first day of such Test Period) and the
Borrowers shall have delivered to the Administrative Agent a
certificate of a Financial Officer of the U.S. Borrower to such
effect setting forth in reasonable detail the computations
necessary to determine such compliance (together with a reasonably
detailed description of the material terms and conditions of such
Indebtedness or drafts of the documentation relating thereto), (D)
no Default shall have occurred and be continuing or would
immediately result therefrom, (E) immediately after giving effect
thereto, the U.S. Borrower and its Restricted Subsidiaries are in
compliance, on a Pro Forma Basis after giving effect to the
incurrence of such Indebtedness (and any other Indebtedness
incurred since the last day of the immediately preceding Test
Period), and the application of the proceeds thereof, with the
covenant set forth in Section 6.12 (tested as if a Liquidity Event
Period (Fixed Charge Coverage Ratio) was continuing) recomputed as
at the date of such Test Period as if all such Indebtedness was
incurred on the first day of the immediately preceding Test Period
and (F) except in the case of Guarantees by Excluded Non-U.S.
Restricted Subsidiaries of such Indebtedness of Non-U.S. Restricted
Subsidiaries, no Restricted Subsidiary shall Guarantee any such
Indebtedness unless such Restricted Subsidiary is also a Subsidiary
Guarantor under this Agreement and the other Loan Documents;
provided further that in the case of Indebtedness
that is secured pursuant to clause (x) above, (1) the covenants,
events of default and other terms of such Indebtedness (other than
interest, fees, discount and other pricing and economic provisions
and redemption or prepayment provisions and call protection and
prepayment premiums), taken as a whole, shall not be more
restrictive to the U.S. Borrower and its Restricted Subsidiaries
than those in the Term Loan Documents, (2) no Subsidiary of the
U.S. Borrower (other than a Loan Party) shall be an obligor in
respect of such Indebtedness, (3) such Indebtedness shall not be
secured by any assets other than the Collateral of the U.S. Loan
Parties of the U.S. Loan Parties, and (4) not less than five
Business Days prior to the incurrence of such Indebtedness, the
U.S. Borrower shall have delivered a certificate of an Authorized
Officer of the U.S. Borrower to the Administrative Agent, together
with a reasonably detailed description of the material terms and
conditions of such Indebtedness or drafts of the documentation
relating thereto, stating that the U.S. Borrower has determined in
good faith that such terms and conditions satisfy the foregoing
requirements;”
(iii) Section 6.01 of
the Credit Agreement is hereby amended by deleting the word
“and” at the end of clause (xxii) thereof, replacing
the period at the end of clause (xxiii) with a semicolon and
inserting the following new clauses (xxiv) and (xxv):
“(xxiv) Indebtedness
of the U.S. Borrower and the U.S. Loan Parties in respect of (x)
the Senior Notes, to the extent that the net cash proceeds
therefrom are applied to the prepayment of the Term Loans
(provided, however, that the Borrower shall not be required to
apply more than an aggregate amount equal to the greater of (i)
$200.0 million and (ii) the amount which is $100.0 million less
than the aggregate original principal amount of the Senior Notes);
provided that (A) no Default shall have occurred and be
continuing or would immediately result therefrom, and (B)
immediately after giving effect thereto, the U.S. Borrower and its
Restricted Subsidiaries are in compliance, on a Pro Forma Basis
after giving effect to the incurrence of such Indebtedness (and any
other Indebtedness incurred since the last day of the immediately
preceding Test Period), and the application of the proceeds
thereof, with the covenant set forth in Section 6.12 (tested as if
a Liquidity Event Period (Fixed Charge Coverage Ratio) was
continuing) recomputed as at the date of such Test Period, as if
all such Indebtedness was incurred on the first day of the
immediately preceding Test Period, and (y) any Permitted
Refinancing of such Senior Notes specified in subclause (x) above;
provided that such Indebtedness pursuant to this Section
6.01(xxiv) otherwise complies with the definition of Permitted
Other Debt (other than clause (b) of that definition, unless such
Senior Notes are secured); and
(xxv) intercompany notes evidencing obligations
relating to Investments made pursuant to Section 6.04(xxii) or
asset transfers made pursuant to Section 6.05(xix); provided that
(A) such intercompany notes are pledged pursuant to the Pledge
Agreement in accordance with Section 5.11 and (B) the obligations
of any obligor evidenced by such intercompany notes shall be
subordinated to the Obligations on terms reasonably satisfactory to
the Administrative Agent.”
(l) Amendment to
Section 6.02 – Liens .
(i) Clause (xvi) of
Section 6.02 of the Credit Agreement is h
